Shareholders' agreement (SHA) — Indian startup template.
Full SHA scaffold for an Indian Companies Act 2013 private limited company — preference rights, ROFR, drag/tag-along, board composition, exit waterfall. Series Seed to Series B.
The shareholders' agreement is the single most important governance document a private Indian company executes. It allocates board seats, defines the voting and information rights of the preferred holders, sets the rules for transfers and exits, lays out anti-dilution mechanics, and — when a fight breaks out — is the document the arbitrator reads first. Getting it close to right on the first round saves you from a five-year renegotiation cycle.
This template is the scaffold of an SHA for a Companies Act 2013 private limited company, sized for a Series Seed to Series B Indian startup with two to four founders and one to four institutional investors. It is built around the Indian Companies Act 2013 (with the Articles of Association as the legally binding mirror — see the explicit cross-reference to entrenchment under Section 5(3)), the Foreign Exchange Management (Non-debt Instruments) Rules 2019 for FDI-linked clauses, the Income Tax Act 1961 Section 56(2)(viib) for the angel-tax-aware preferential pricing language, and the Arbitration and Conciliation Act 1996 for the dispute resolution clause.
The clause set is comprehensive but modular. Each major clause — board composition, reserved matters, anti-dilution (broad-based weighted average is the default; full ratchet is included as an alternative with a comment block flagging investor pressure points), transfer restrictions, ROFR/ROFO, tag-along, drag-along, founder vesting, leaver provisions, information rights, exit and liquidation preference waterfall (1x non-participating preferred is the default), and dispute resolution — can be edited independently. The schedules include the cap table at signing, the agreed budget and business plan reference, the share certificate format, and the form of the deed of adherence for new shareholders.
This is a scaffold reviewed by counsel familiar with Indian VC practice. It is a starting point, not a final document. Every SHA should be re-marked by your lawyer to reflect the specific deal economics, the investor's standard positions, and the founder protections you negotiate. We provide it because most founders see five SHAs in a career; investors see fifty a year, and the asymmetry shows up in the margins.
The whole document.
Every clause and schedule shipped in the DOCX. No surprises after you download.
- Parties, recitals, and definitions (60+ defined terms)
- Share capital and Articles cross-reference (Section 5(3) entrenchment note)
- Board composition — seats, quorum, observer rights, chairperson
- Reserved matters — board-level and shareholder-level lists
- Investor information rights — quarterly, annual, board-pack, inspection
- Pre-emptive rights / anti-dilution — broad-based weighted average (default) + full ratchet alternative
- Right of First Refusal (ROFR) and Right of First Offer (ROFO)
- Tag-along and drag-along — thresholds, mechanics, valuation method
- Founder vesting — 4-year vest with 1-year cliff, double-trigger acceleration
- Good-leaver / bad-leaver provisions and buyback mechanics
- Liquidation preference — 1x non-participating preferred (default)
- Exit waterfall and conversion mechanics for CCPS/CCDs
- Anti-dilution — broad-based weighted average formula and worked example
- Founder non-compete and non-solicit
- Confidentiality and IP assignment
- Dispute resolution — SIAC / Mumbai-seated arbitration (alternatives included)
- Boilerplate — notices, severability, governing law (Indian)
- Schedules — cap table, business plan reference, deed of adherence, SH-1 format
Timing and trigger.
At the first institutional investment round, and refreshed (or amended-and-restated) at each subsequent round. Always executed alongside an amended set of Articles of Association reflecting the same rights.
The sections it cites.
Companies Act 2013 — Section 5(3) entrenchment, Section 6 (Act overrides MOA/AOA where conflict), Section 47 (voting rights), Section 62 (further issue), Section 88 (Register of Members), Section 56 (transfer). Foreign Exchange Management (Non-debt Instruments) Rules 2019 (FDI-linked transfer and pricing constraints). Income Tax Act 1961 Section 56(2)(viib) (angel tax) — Rule 11UA fair-value benchmarking for premium pricing. Arbitration and Conciliation Act 1996 for the dispute resolution mechanism. SEBI ICDR Regulations (for any future public-issue-readiness clauses).
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Honest disclaimer: this is a scaffold, not legal advice. It is reviewed by Indian practitioners but every filing should be reviewed by your own counsel before execution.
Documents that travel together.
Term sheet template — Series A
Indian VC-norm Series A term sheet — economics, control, exit, conditions. Drafted from the founder side with investor-standard positions annotated.
Founder restricted stock agreement (with vesting)
Restricted stock purchase + reverse-vesting agreement for Indian founders. 4-year vest, 1-year cliff, double-trigger acceleration, good-leaver / bad-leaver mechanics.
ESOP scheme document (Rule 12)
Full Rule 12 ESOP scheme document for Indian unlisted companies — pool authorisation, eligibility, vesting framework, exercise mechanics, exit liquidity provisions.
Questions buyers ask.
Does this match what a typical Indian VC will offer?+
It mirrors the clause set Indian institutional VCs use at the seed-to-Series-B stage — CCPS as the share class, broad-based weighted average anti-dilution, 1x non-participating liquidation preference, double-trigger acceleration. Investor markups will reposition some of the founder-side defaults. The annotations in our template flag the common investor pushbacks so you can negotiate from a position of knowledge.
Can I use this for a Delaware C-Corp instead?+
No — this is drafted for an Indian Companies Act 2013 private limited company. The share class names, the entrenchment cross-reference under Section 5(3), the FEMA pricing clauses, and the Indian arbitration framework are not transferable. For a Delaware structure you'll want a US-counsel-drafted SAFE or NVCA model.
What about FDI route and FEMA compliance?+
The template carries the FEMA-relevant pricing language under the Non-debt Instruments Rules 2019 for non-resident investors, and references the FCGPR filing trigger. Sectoral caps and approval-route conditions vary by industry — you'll need to layer those on top with your own counsel.
Has this template been reviewed by a practitioner?+
Yes. Templates are drafted by our editorial team with input from Indian practitioners across corporate secretarial, valuation, and AIF practice. That said, every filing should be reviewed by your own counsel before execution. This is a scaffold, not legal advice.
Can I customise it?+
Yes — open the PDF in any editor that supports text extraction (Word, Google Docs, Pages all paste cleanly from the PDF), or use it as a structural reference for your own draft. Sections are organised modularly so you can keep what applies, swap defaults where flagged, and slot in your facts. Annotations note which clauses are negotiable and which are statutory minimums you can't drop. An editable .docx version is on the roadmap.
Does this need to be mirrored in the Articles of Association?+
Yes. Under Indian company law, contractual rights in an SHA that are not also entrenched in the Articles can be unenforceable against the company. The standard practice is to amend the AoA at the same EGM that approves the SHA — Section 5(3) of the Companies Act 2013 allows for entrenchment. The template carries the explicit cross-reference and a recommended AoA amendment list as Schedule.
Or skip the template
and run the workflow.
See how the cap table records the events that drive these documents. The template gets you to the first draft; Kapitalyze gets you to the filing, the register update, and the audit trail in one workflow.